Background and Framework

Immediately after signing the Japan-Singapore Economic Partnership Agreement in Singapore in January 2002, Japanese Prime Minister Koizumi proposed that an ASEAN-Japan Comprehensive Economic Partnership (AJCEP) be set up. No specifics were given at the time, and the proposal was seen as a rushed response to the ASEAN China FTA proposal announced by Chinese Premier Zhu Rongji in November 2001. At an economic ministers meeting in September 2002, an ASEAN-Japan Closer Economic Partnership Expert Group was established and submitted a report recommending immediate steps to realize a framework for the AJCEP, including elements of a possible FTA.

At the ASEAN-Japan Summit held in Phnom Penh in November 2002, Koizumi indicated that Japanwould adopt a two-track approach, involving a comprehensive economic partnership agreement with ASEAN as a group, and bilateral pacts with individual ASEAN countries. On October 8, 2003, during the Japan-ASEAN Summit, the ASEAN Japan Framework Agreement for Comprehensive Economic Partnership was signed in Bali, Indonesia. This is parallel to ongoing bilateral negotiations on economic partnership agreements (EPAs) between Japan and Thailand, Malaysia, and the Philippines.[1]

Presently, the ASEAN-Japan Comprehensive Economic Partnership Agreement is expected to be signed in November 2007 during the 13th Asean Summit.

  1. What is ASEAN-Japan Free Trade Area (FTA)?

Trade between Japanand ASEAN totaled 16.4 trillion yen in 2005, making ASEAN Japan’s third-largest trading partner after the United Statesand China. The FTA is the first that Japanhas concluded with a regional bloc. Japanis now seeking a 16-nation free trade zone in the Asia-Pacific region that would put together the ASEAN members[2],Australia,China,India,Japan,New Zealand andSouth Korea. For the Japanese government, this FTA has been an important target as it tries to achieve a stronger position in Asia vis-à-visChina,Korea andUnited States.

The ASEAN-Japan FTA will cover substantially all trade, and negotiations include rules of origin, rules governing tariff reduction or elimination, non tariff measures, and trade remedy measures. Liberalization of trade in services will include progressive elimination of substantially all discrimination between ASEAN andJapan, expansion in depth and scope of liberalization of trade in services, facilitation of entry and temporary movement of business people, and enhanced cooperation in services to improve efficiency and competitiveness.

2. What are the projected economic benefits of the ASEAN-Japan FTA?

ASEAN Japan Comprehensive Economic Partnership will allow cumulation of qualifying value contents among ASEAN and Japan for industrial goods; deepen and enhance specialization in ASEAN and Japan; Encourage investments from Japanese businesses; and strengthen ASEAN industries’ competitiveness in the global market.

3. What is the Framework Agreement on ASEAN-Japan Comprehensive Economic Partnership (AJCEP)?

The Framework Agreement on the AJCEP provides measures for immediate implementation, including technical assistance for and capacity building in ASEAN, trade and investment promotion and facilitation measures, trade and investment policy dialogue and business sector dialogue, measures to facilitate the mobility of business people, and exchange and compilation of customs tariff and bilateral trade statistics. It also covers programs on facilitation and cooperation, including trade-related procedures, business environment, intellectual property rights, energy, information and communication technology, human resource development, Small and Medium Enterprises, tourism, transportation and logistics, standards and conformity, and mutual recognition arrangements.

  1. What are the objectives of the Agreement?

Objectives of the AJCEP are to strengthen ASEAN-Japan economic integration; enhance their mutual competitiveness in the world market; progressively liberalize and facilitate trade in goods and services and a transparent and liberal investment regime; explore new areas and develop appropriate measures for further cooperation and integration; and facilitate the more effective economic integration of Kingdom of Cambodia, Lao PDR, the Union of Myanmar and the Socialist Republic of Viet Nam (hereinafter referred to as “CLMV countries”) and bridge the development gap in ASEAN.

5. What are the timeframes of the negotiations on the Agreement?

Consultations on the liberalization of trade and investment under the AJCEP will begin in 2004 and negotiations begin in 2005. Implementation of AJCEP, including elements of a possible FTA, should be completed by 2012, with due account to the economic levels and sensitive sectors in each country, including an additional five-year time frame for the CLMV countries.

6. What are the differences/similarities between ASEAN-Japan Comprehensive Economic Partnership Agreement (AJCEPA) and Japan-Philippines Economic Partnership Agreement (JPEPA)?

The AJCEPA and the JPEPA are substantially the same in terms of coverage and scope. Pursuant to the Framework Agreement, the AJCEPA will cover the following areas which are also covered by specific provisions of the JPEPA:

AJCEPA

Corresponding Chapter/

Provision in the JPEPA

Trade in Goods Chapter 2
Trade in Services Chapter 7
Investment Chapter 8
Trade and investment promotion and facilitation measures Implementing Agreement
Measures to facilitate the mobility of business people Chapter 9
Improvement of Business Environment Chapter 13
Intellectual Property Rights Chapter 10
Cooperation in various areas:- Energy- Information and Communications Technology (“ICT”)

– Human Resource Development (“HRD”)

– Small and Medium Enterprises (“SMEs”)

– Tourism and hospitality

– Transportation and logistics

– Standards and conformance and mutual recognition arrangement

– Other possible technical co- operation projects, including environment, automobile, bio-technology, science and technology, sustainable forest management, competition policy, food security and financial services co-operation.

Chapter 14

However, while the JPEPA is now classified as a treaty and is thus currently before the Senate for concurrence, the AJCEPA, through DOJ Opinion No. 35[3] is classified by the Executive Branch as an executive agreement that need not be passed for Senate concurrence.

7. What is the impact of this AJCEPA on JPEPA?

  • As for products covered by “Schedule of Concessions” under the AJCEPA, the tariff rate in such schedule would be applied to that product traded from all ASEAN countries to Japan in condition that the rules of origin under the AJCEP is fulfilled.
  • As for a product which is not covered by the AJCEP but is covered by the Schedule of Concessions under the JPEPA, the tariff rate in Japan’s schedule of concessions under the JPEPA would be applied to that product traded from the Philippines.
  • As for product which is covered by the AJCEP Agreement as well as the bilateral EPAs,
  • When the preferential tariff rate for that product under the JPEPA is lower than that under the AJCEP in the same period of time (due to the different staging schedule), private companies would prefer to apply for the tariff rate in the schedule of concessions under the JPEPA.
  • In other cases, private companies would prefer to apply for the tariff rate under the AJCEP since the rules of origin under the AJCEP enables cumulation in Japan and ASEAN from all directions of trade.

8. What is our call? What should be done?

  • The Congress should vehemently assert its inherent power to set tariffs and to regulate foreign commerce through international trade agreements.
  • From official files of the DTI, there is reason for the Senate to act swiftly in order to:

a. Acquire a copy of the AJCEPA

b. Determine whether or not the commitments and concessions made in the AJCEPA are the same or substantially the same as those extended in the JPEPA

  • There is reason to believe that the commitments and concessions made in the JPEPA will likewise be extended not only toJapanbut also to the members of the ASEAN. It must be noted that during the consultations conducted by the Tariff Commission on July 5, 2007, the latter stated in its own presentation that:
  • ASEAN 6 can make offers as provided in their respective bilateral economic partnership agreements with Japan, including the staging of their tariff reduction or elimination schedules (emphasis supplied).
  • ASEAN 6 not required to offer beyond the proposed modality
  • According to Japan’s calculations, all bilaterals clear the 93.8% NT + SL threshold
  • ASEAN and Japan will exchange a full list of offers for NT, SL, HSL and EL
    1. Ensure that despite DOJ Opinion No. 35, the AJCEPA will nevertheless be submitted to the Philippine Senate for its concurrence.
  • The signing of the AJCEPA and its possible classification as a mere executive agreement will make a mockery out of the Senate proceedings on the JPEPA if indeed the AJCEPA contains the same contested offers as those extended in the JPEPA.
  • If the AJCEPA is signed, thePhilippineswould be obliged to extend the same concessions and commitments to all members of the ASEAN.
  • All stakeholders should denounce the patent disregard by the government of its right to information on matters of public concern. The seemingly culture of secrecy and lack of transparency in the government should stop now. The people have the right to participate effectively and reasonably at all levels of social, political, and economic decision-making.



[1] “East Asian Regionalism and ASEAN-Japan Economic Partnership,” ASEAN-Japan Cooperation: A Foundation for East Asian Community; (ed. Japan Center for International Exchange),Tokyo: Japan Center for International Exchange, 2003, p. 86. Chia Siow Yue.

[2] Brunei Darussalam, the Kingdom of Cambodia, the Republic of Indonesia, the Lao People’s Democratic Republic (“Lao PDR”), Malaysia, the Union of Myanmar, the Republic of the Philippines, the Republic of Singapore, the Kingdom of Thailand and the Socialist Republic of Viet Nam.

[3] August 9, 2005

Briefing Paper on the Establishment of the ASEAN-Japan Free Trade Area (FTA)

You May Also Like

Leave a Reply

Your email address will not be published. Required fields are marked *